Tip #28: Use price-protection guarantees to always get the lowest price

Today’s tip is to use a featured called “price protection” whenever possible, which lets you protect yourself from price drops. In plain terms: If you buy something and the price goes down, the company will refund you the difference.

Price protection is something you hardly ever hear about, but it tends to be applicable to very expensive purchases…meaning you can save a lot. Here’s how it works: When you make a purchase, occasionally the price will drop shortly thereafter. (For example, on flights, or if you bought the original iPhone and the new 3G iPhone came out a few days later.)

The trick is, many times you can often get refunded the difference. If you imagine a flight dropping $200 (which is very possible), or a new computer dropping $100, that can add up quickly. Let’s take a look at some examples.

Retail Purchase Protection2
Most items purchased with your card are eligible for protection against accidental damage or theft for up to 90 days from the date of purchase.

Price Protection
If you buy something with your Citi card and then see it advertised in print for less within 60 days, you will receive a refund for the difference up to $250 (excludes Internet purchases and certain items).

Since I am a huge nerd and make virtually 99% of my purchases online, I haven’t used the price protection offer yet. But one day, I have a bright dream that I will purchase something offline and avail myself of the generosity of the corporate automatons at Citibank.

Price protection for travelOrbitz has an automatic price guarantee that most people don’t know about. You don’t even have to do anything — they’ll just mail you a check if the price drops. (However, I book a lot of flights and I’ve never gotten a check…so can anyone verify this?)

A new travel site on the block is Yapta, which also monitors flights and will refund you the difference in a price drop.

I don’t really like that ad showing up right above this line but I’m too lazy to crop the photo.

Price protection for general retail purchases
Whenever you make major purchases (say, over $200), you should have a checklist of things to do. Check for discounts, add it to your auto-monitoring for price protection, etc. I’ll talk more about this in another post.

But for now, check out PriceProtectr, which lets you enter your purchases from 150 stores (Costco, Apple, BestBuy…) and automatically monitors the prices to see if you’re eligible for price-protection refunds. Check carefully, though: They still list Amazon as one of the stores they monitor, but Amazon doesn’t do price protection anymore.

Note: Don’t do this for $20 purchases. Don’t waste your time. Just focus on the big 5-10 purchases you make per year and optimize those.

Total savings: $10 to $30 per month

Last thing to do
1. Check out the other tips in the Save $1,000 in 30 Days Challenge
2. Leave a comment on this post describing how much you’re saving with this tip and any unusual techniques you use to make this tip work.

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8 Comments

Don’t forget some clothing stores will honor a price adjustment if what you buy goes on sale up to two weeks after.

I had a last minute formal holiday party to go to the other weekend. I was so pissed that I didn’t have time to bargain shop– I had to run out and get a dress to wear that day (I hadn’t been to a formal event since prom). Anyway, after I had settled on a dress from Nordstrom I went found it on sale online– 1/2 off! All I had to do was print out the page from their website and bring it into the store the following weekend and they refunded me the difference.

On a very similar note, don’t be afraid to take advantage of natural disaster related offers with regards to credit cards, etc.

After Ike, I was able to defer my student loan payments (and all applicable finance charges/etc) until February 2009 and my payments/finance charges on one of my credit cards until March 2009. Because I live in a federal disaster area those deferments don’t affect my credit rating, and I am able to apply the money that would normally go to those payments to more pressing needs (such as paying down higher interest rate credit cards etc). At worst, you can continue to make payments without accruing any finance charges – which can save you a lot of money depending on your current balances, etc.

There is a store in our area (Kohl’s) that you don’t even have to watch to see if something goes on sale. Within two weeks of your purchase if you take your receipt into customer service they’ll pull up your items and the system tells them if any have gone on sale…they’ll refund the difference.

Some online companies aren’t good about this. I purchased several items from Old Navy. The next day one of the items I purchased was marked down even less. I sent an email to customer service and they said if I purchase it when it was on sale and it went on sale for less they don’t give you the difference…only if it was full price to begin with.

As I read the terms and conditions, Orbitz only gives you a refund if another customer actually BOOKS the exact same itinerary as yours, with a lower price. Not just if it’s available at a lower price. And they also have to book it with Orbitz!

Think about how rare it is to see two people with the exact same itinerary– how many of the people on your flight to Boston are also on your flight coming back? And how many of those booked their flight with Orbitz, instead of some other site or the airline itself? I don’t know what the market share statistics are, but only 16% of flight bookings are made though independent travel websites, and that also includes Expedia, Hotwire, Travelocity, etc.

Anyway, if you do the math, I think this is way more of a marketing trick than any real opportunity to guarantee the best prices.

Amex doesn’t honor price protection any longer. I tried using it it in July of ’08 (I am a platinum card holder) and they advised they no longer provide this service. i sent the agent to the website page which said they did – also her manager – and both indicated I was out of luck.

So I’m not sure where Gizmodo is getting their information but unless Amex reinstated their policy, it’s not available.

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About Ramit Sethi

Ramit Sethi is the author of the New York Times bestseller, I Will Teach You To Be Rich. He writes about psychology, entrepreneurship, careers and personal finance for over 750,000 monthly readers on his website.